Staking crypto : Ethereum et Solana dominent le podium

Crypto staking: Ethereum and Solana dominate the podium

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The crypto staking market cap just hit $94.92 billion. Unsurprisingly, ETH and SOL topped the chart.

Ethereum, which recently successfully transitioned to a PoS consensus mechanism, remains the most widely used asset in crypto staking activities. It is closely followed by Solana whose holders have placed $12.7 billion worth of tokens in staking, according to StakingRewards.com.

Cardano comes third with $11 billion, followed by Binance Smart Chain with $5 billion and Avalanche with around $4.6 billion in staked assets. In the top 10, we also find Polkadot, Cosmos Hub, Tron, Polygon and Near Protocol. Among all the top 10 cryptocurrencies, Cosmos (ATOM) ranks first in terms of yield (17.89%).

As a reminder, staking (not to be confused with mining) is to lock crypto assets for a fixed period of time in order to earn rewards. It is also a means of validating transactions on the blockchain. In general, a deterministic algorithm selects the nodes that have staked the most crypto to validate transactions.

In contrast, mining is an activity in which validators compete with each other to add new blocks to the blockchain. This, using an energy-intensive computational process that has raised concerns from multiple agencies and governments, including President Biden’s administration.

Crypto staking was introduced in 2012 by blockchain developers Sunny King and Scott Nadal. At the time, they presented it as an alternative to Bitcoin’s energy-intensive mining mechanism.

Ethereum: cryptocurrency or financial security?

As of this writing, Ethereum, which is the second largest cryptocurrency in the world by market capitalization, has 14,545,424 ETH placed in staking, with 430,080 validators and an annual return of 4.1%. That said, analytics firm Nansen reveals that most staked ETH is unprofitable at current prices. Currently, Ethereum is trading at $1,353.63, according to Coingecko.

Ethereum’s recent transition from proof of work to the Proof of Stake made it possible to change the issue model of the asset. With its total supply capped, ETH can now transition from a token to an exchange instrument.

Since rolling out The Merge update, the network has injected 3,095.12 ETH into the circulating supply. The “fee burning” mechanism, which was introduced in August 2021 by EIP-1559, helps control supply by regularly removing ETH from circulation.

It should also be noted that investors who have placed their ETH in staking will – a priori – only be able to withdraw them after the deployment of the Shanghai update, which should take place in early 2023. Before The Merge, those who wanted to create nodes of validation had to place at least 32 ETH in staking. Nevertheless, even those who could not afford to deposit such a colossal sum could go through staking pools.

According to Gary Gensler, Chairman of the United States Securities and Exchange Commission (SEC), Ethereum’s transition to a proof-of-stake blockchain means the cryptocurrency passes the Howey test, which determines whether an asset whether or not it constitutes a title.

Crypto staking: several options available to investors

Most staking-eligible cryptocurrencies offer different options to their holders. On Ethereum, for example, you can stake your assets individually by creating a validator node or go through a liquidity pool to earn rewards.

For its part, Solana, which is the second most staked cryptocurrency, is based on a delegated proof-of-stake mechanism, which allows tokens to be delegated to network validators.

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